Nationwide's CIO Turns Tables on Research Firms

FRAMINGHAM (06/30/2000) - Like most CIOs, Bruce Barnes at Nationwide used to buy off-the-shelf information technology research from all the big players - Forrester Research Inc., Gartner Group Inc. and Meta Group Inc., to name a few.

"It was like the milkman who says, ‘Here's what I'm selling today. How much are you going to take?' " Barnes recalled. "In many ways, they all sell the same stuff, so they overlap like crazy."

Not anymore.

Under what one analyst described as "an absolutely unique" deal, Barnes now requires that the research competitors work together to provide a comprehensive package of services customized exclusively for Nationwide. So far, the one-of-a-kind deal, which marks its first anniversary this month, has cut the Columbus, Ohio-based insurance provider's annual IT research subscription tab by 40%, to less than $600,000.

Coming Together

"It works out a lot better," said Lori King, an IT architecture specialist at Nationwide who uses product evaluation research primarily from Gartner Group and Meta Group, both based in Stamford, Connecticut, in her day-to-day work.

"Before, I had a whole bunch of information, and it was harder to focus," said King.

Not surprisingly, getting the research firms to work together wasn't easy.

First, Barnes herded salespeople from Gartner, Meta Group, Cambridge, Massachusetts-based Forrester and Giga Information Group Inc., also in Cambridge, into a conference room to lay out his plan.

Barnes and a cross-functional team representing all of Nationwide's lines of business had divided the services they wanted into six key categories: strategy and technology trending, product evaluation, piloting and prototyping, implementation, optimization and asset retirement.

They then directed the vendors to decide which of the categories matched their own "sweet spots" and to return in three weeks with a joint plan for delivering those research services.

Barnes threatened to pull all business from companies that refused to provide their services under Nationwide's new model. That's when the phone calls began.

"I got calls from several senior officials of these companies who told me that I was stupid and that this wasn't the way to do business," said Barnes. Still, three weeks later, the vendors had a plan.

Thornton May, an analyst at Cambridge Technology Partners Inc. in Cambridge, Massachusetts, said Fortune 500 companies now spend an average of $250,000 to $400,000 on IT research that's largely redundant.

May said that most companies could cut their research costs significantly by making vendors provide select information, rather than buying off-the-shelf services.

"Right now, research vendors sell to clients on their basis," May explained. " It's not value-based pricing, but vendor-based pricing."

The CIO at a large food company who asked that his name be withheld said he found so much overlap between Gartner and Giga that he won't be using Giga next year.

"The best value I get out of Gartner Group is I get six or seven tickets to their annual fall symposium in Orlando, and we go down there and just drink from the fire hose," the CIO said. "You get all of their published data in a week."

Carol Wallace, a spokeswoman for Gartner Group, said she disagreed that the way the research firm is doing business with Nationwide is anything "innovative" or "highly unusual."

"This was basically a competitive pitch that they conducted with all [the] firms in the same room at the same time," Wallace said.

But Mike Conley, global sales manager at Forrester, said the Nationwide deal was "the first time we had ever been confronted that way."

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